伯南克宏观经济学ch(1).ppt

Chapter 14,Monetary Policy and the Federal Reserve System,Chapter Outline,Principles of Money Supply Determination Monetary policy and its effectiveness Monetary Control The Conduct of Monetary Policy: Rules Versus Discretion,Principles of Money Supply Determination,Three groups affect the money supply The central bank is responsible for monetary policy Depository institutions (banks) accept deposits and make loans The public (people and firms) holds money as currency and coin or as bank deposits,Principles of Money Supply Determination,The money supply under fractional reserve banking As an economy becomes more sophisticated financially, banks develop People may want to hold their money in bank deposits The currency that banks hold is called bank reserves When bank reserves are equal to deposits, the system is called 100% reserve banking When the reserve-deposit ratio is less than 100%, the system is called fractional reserve banking,Principles of Money Supply Determination,The money supply under fractional reserve banking When all the banks catch on to this idea, they will all make loans as the economy undergoes a multiple expansion of loans and deposits,Principles of Money Supply Determination,The money supply under fractional reserve banking The money supply in this economy is equal to the total amount of bank deposits The relationship between the monetary base and the money supply: M DEP = BASE/res (no currency held by public ) Let M money supply, BASE monetary base, DEP bank deposits, RES bank reserves, res banks desired reserve-deposit ratio (RES/DEP) So an economy with fractional reserve banking and no currency held by the public has money supply equal to the monetary base divided by the reserve-deposit ratio,Principles of Money Supply Determination,The money supply under fractional reserve banking Each unit of monetary base allows 1/res of money to be created The monetary base is called high-powered money because each unit of the base that is issued leads to the creation of more money,Principles of Money Supply Determination,The money supply with both public holdings of currency and fractional reserve banking The money supply consists of currency held by the public and deposits, so M = CU + DEP (14.4) The monetary base is held as currency by the public and as reserves by banks, so BASE CU RES (14.5),Principles of Money Supply Determination,The money supply with both public holdings of currency and fractional reserve banking Taking the ratio of these two equations gives M/BASE (CU + DEP)/(CU + RES) (14.6) This can be written as M/BASE (CU/DEP) + 1/(CU/DEP) + RES/DEP) (14.7) The currency-deposit ratio (CU/DEP, or cu) is determined by the public The reserve-deposit ratio (RES/DEP, or res) is determined by banks,Principles of Money Supply Determination,The money supply with both public holdings of currency and fractional reserve banking Rewrite Eq. (14.7) as M (cu + 1)/(cu + res)BASE (14.8) The term (cu + 1)/(cu + res) is the money multiplier The money multiplier is greater than 1 for res less than 1 (that is, with fractional reserve banking) If cu 0, the multiplier is 1/res, as when all money is held as deposits The multiplier decreases when either cu or res rises,Monetary Control,Means of controlling the money supply Reserve requirements The Fed sets the minimum fraction of each type of deposit that a bank must hold as reserves An increase in reserve requirements forces banks to hold more reserves, thus reducing the money multiplier,Monetary Control,Means of controlling the money supply The monetary base equals banks reserves plus currency held by the nonbank public Open-market operations Open-market purchase: increase monetary base Open-market sale: decrease monetary base Discount window lending Lending reserves to banks so they can meet depositors demands or reserve requirements A discount loan increases the monetary base The interest rate on such borrowing is called the discount rate,Summary 19,Monetary Control,Intermediate targets Intermediate targets to guide policy as a step between its tools or instruments (such as open-market purchases) and its goals or ultimate targets of price stability and stable economic growth Intermediate targets are variables the Fed cant directly control but can influence predictably, and they are related to the Feds goals Most frequently used are monetary aggregates such as M1 and M2, and short-term interest rates, such as the Fed funds rate,Monetary Control,Intermediate targets The Fed cannot target both the money supply and the Fed funds rate simultaneously Targeting money supply Targeting the interest rate,Figure 14.6 Inter